Correlation Between NRG Energy and Wabash National

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NRG Energy and Wabash National at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NRG Energy and Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and Wabash National, you can compare the effects of market volatilities on NRG Energy and Wabash National and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NRG Energy with a short position of Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Wabash National.

Diversification Opportunities for NRG Energy and Wabash National

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between NRG and Wabash is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National and NRG Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NRG Energy are associated (or correlated) with Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of NRG Energy i.e., NRG Energy and Wabash National go up and down completely randomly.

Pair Corralation between NRG Energy and Wabash National

Considering the 90-day investment horizon NRG Energy is expected to generate 1.12 times more return on investment than Wabash National. However, NRG Energy is 1.12 times more volatile than Wabash National. It trades about 0.06 of its potential returns per unit of risk. Wabash National is currently generating about -0.08 per unit of risk. If you would invest  7,281  in NRG Energy on September 24, 2024 and sell it today you would earn a total of  1,764  from holding NRG Energy or generate 24.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

NRG Energy  vs.  Wabash National

 Performance 
       Timeline  
NRG Energy 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in NRG Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NRG Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Wabash National 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wabash National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

NRG Energy and Wabash National Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NRG Energy and Wabash National

The main advantage of trading using opposite NRG Energy and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, Wabash National can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wabash National will offset losses from the drop in Wabash National's long position.
The idea behind NRG Energy and Wabash National pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years